Tax study to tackle property depreciation

Local officials say they will again seek repeal of Nevada’s property tax depreciation law.

The advisory committee to the Legislative Committee on Local Government Taxes and Finance agreed Monday to put a thorough review of the state’s complex property tax laws on its agenda between legislative sessions.

The issue was raised by Terri Thomas, representing the city of Sparks, who said she believes the depreciation law is unconstitutional.

The Legislature added a depreciation schedule to the property tax calculation in 1983. It reduces the value of a structure by 1.5 percent each year until 25 percent of the value remains.

That means older homes in Nevada are taxed at only a fraction of the amount levied against a new home.

Thomas said she had the Washoe Assessor’s Office take a look at how much money Sparks was losing because of the depreciated value of older homes.

“In the city of Sparks, 45 percent of assessed value has been eroded since the law went into effect,” she said.

She said the only other state with such a depreciation schedule was Indiana until a lawsuit by taxpayers struck it down as unconstitutional. She said Nevada’s law is similar and, she believes, would also fall to a court challenge because it results in those with new homes paying more than their share of the property tax burden.

Advisory Committee vice-chairman Marvin Leavitt said that’s just one of the issues the group must deal with in the property tax system. He and chairman Guy Hobbs assigned Thomas the task of heading a sub-group study to examine property tax rates around the state and the method used to calculate the taxes.

Not shying from controversy, the advisory committee also agreed to take on the issue of tax exemptions in Nevada. There are dozens of exemptions and tax breaks on everything from farm equipment to food and medicines to aircraft parts, newspapers, and a variety of tax breaks for veterans, the handicapped and seniors.

Mike Alastuey, representing Clark County, agreed to head that portion of the study.

The committee also decided to examine factors – including the state dumping responsibilities on them – most driving increases in local government budgets. They cited as an example the 2003 Legislature’s decision to make local governments contribute to the health benefit premiums of their retirees. Many of those local entities had been turning their retirees over to the state plan and leaving them to pay their own health-plan costs.

The committee acts as the advisory group and provides technical assistance to the legislative committee which prepares legislation for each session dealing with local government finance and tax issues.